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Market production update
JUBILEE PLATINUM PLC
Registration number (4459850)
JSE share code: JBL
AIM share code: JLP
ISIN: GB0031852162
("Jubilee" or the "Company)
OPERATIONS UPDATE
Jubilee, the AIM-quoted and (JSE Listed ) Mine-to-Metals specialist, is pleased to announce an
operations update for the third quarter of 2013 – including cash flows, revenues and gross profits,
which are continuing to grow, from the Company’s Middelburg smelter (“Smelter”) operations. The
addition of new secured toll smelting contracts for the Smelter operations is expected to further
enhance earnings.
In addition, the Company is also announcing an update regarding the proposed acquisition of
Platinum Australia Limited ("Platinum Australia" or "PLA"), the sale of the non-platinum assets to
Global Renewable Energy (“GRE”) and the sale of the Quartzhill property owned by Tjate Platinum
Corporation Pty Ltd (“Tjate”).
Jubilee Smelting and Refining - Smelter Operations (“JSR”)
- Unaudited revenue increased by 43% during Q3 2013 compared to Q3 2012 - excluding inter
group electricity sales to the Smelter operations
- Unaudited gross profit in Rand terms increased by 89% during Q3 2013 when compared to
Q3 2012 and gross profit percentage increased by 32% during Q3 2013 when compared to
Q3 2012 (refer to the table below)
- Jubilee secured a further ferroalloy-smelting contract for ferrosilicon (FeSi) on the back of
the successful phase 3 upgrade of the Smelter. FeSi production commenced 5 August 2013
- The Smelter’s capacity remains fully contracted at a current operational capacity of 10,000
tons of metal per annum
- Jubilee has secured a new ferronickel (FeNi) toll smelting contract. This new contract offers
an increase in the revenue per ton of metal produced of 17% at the targeted metal
production of 9,600 tons of FeNi per annum compared to current production level of 6,240
tons of FeNi per annum under the existing FeNi toll contract
- In view of these continued positive developments at the Smelters the Jubilee Board has
opted not to offer a further extension to GRE under the executed Sales Agreement –
announced on 28 May 2013.
- The new FeNi contract extension allows Jubilee to commence with the planned final phase
of the upgrade of the Smelter to conclude the smelter infrastructure renewal and the
recommissioning of the existing third furnace in order to increase the smelter design
capacity to an estimated 13,800 tons of metal per annum.
- The estimated £410,000 cost of this final phase will be provided through project funding
secured over the projected earnings of the Smelter operations.
- With the revenues from new toll smelting contracts, the Smelter operation will be able to
sustain revenue growth resulting in positive earnings.
Leon Coetzer, CEO of Jubilee Platinum, said “In response to the downturn in platinum markets,
Jubilee refined its short term strategy to leverage off the ConRoast process to secure access to both
platinum-containing chrome rich materials that are at or near surface as well as platinum-bearing
waste materials at surface.
“Jubilee simultaneously commissioned the Smelter operations targeting the production of ferroalloy
metals based on the patented ConRoast process. These operations continue to generate growing
cash flows.
“We remain focused on increasing our earnings growth profile with a view to underpinning our
Mine-to-Metals strategy. Our rights to the ConRoast process and targeting near or at surface
platinum and ferrometal-containing material remain integral to achieving this goal.
“We are delighted by the latest contract wins which highlight the strengths of the Smelter
operations and are helping to drive our forward looking strategy. Given the growing returns
available we have opted not to offer a further extension to GRE.
“The Smelter operations are generating growing cash flows by targeting the production of ferroalloy
metals based on the patented ConRoast process and reductive smelter technologies.
“In addition, the Company has been successful in securing the rights to the recovery of platinum
group metals (“PGM’s”) from the surface material at the Dilokong Chrome Mine (“DCM”) – which
will further enhance the earnings profile of the Company.
“We continue to engage with companies holding similar assets to the DCM surface material to grow
Jubilee’s access to platinum containing material at or near surface. The Company will provide further
updates to the market regarding these discussions as soon as it is appropriate. The prevailing market
conditions for securing resource funding are providing unusually attractive opportunities which
Jubilee is actively pursuing.
“The ConRoast process remains key to unlocking near-term value and we are continually evaluating
opportunities that will consolidate its unique application in the industry. We will continue to explore
any opportunistic offers that could potentially accelerate our strategy.”
Background to Jubilee’s Smelting and Refining - Smelter Operations
Jubilee acquired JSR in 2009 and increased its holding to 100% of JSR in 2012. Jubilee positioned JSR
as a strategic processor of waste and low grade material containing platinum and ferrometals. The
smelting recipe used is based on Jubilee’s exclusive ConRoast reductive smelt process. In June 2011
Jubilee commissioned a smelter infrastructure renewable program to both replace out dated
smelter processes and turn JSR into a positive earnings company.
The renewable program consists of four phases:-
• Phase 1 – Install and commission a new 5MVA continuous plasma ARC furnace (completed)
• Phase 2 – Upgrade and expand the metal granulation facility (completed)
• Phase 3 – Upgrade the existing 2.2 MVA batch plasma ARC furnace and supporting off-gas
systems (completed)
• Phase 4 – Upgrade the existing 2.6 MVA batch plasma ARC furnace and supporting off-gas
systems (work in progress)
Each phase of the project has been linked to clear targets as listed below and motivated against
contracted furnace capacity. To date Phases 1 to 3 have been implemented and achieved the stated
targets. JSR has consistently achieved increased revenues with improved gross profit margins
through each phase of the program.
• Phase 1 – Targeted monthly production of 500 – 550 tons of metal (FeNi) with a gross profit
margin of 22%, backed by the FeNi toll smelting contract;
• Phase 2 – Increased production specification with reduced re-melting with an improved
gross profit margin of 29%;
• Phase 3 –Increased targeted monthly production of 650 – 700 tons of metal (Hi target - 500t
FeNi and 200t FeSi) with an improved gross profit margin of 34%, backed by the FeSi toll
smelting contract; and
• Phase 4 – The objective of the increased design furnace capacity is to increase targeted
monthly production by 450 metal tons per month which would equate to a plant capacity of
950 – 1,150 tons of metal (Hi target - 850t FeNi and 300t FeSi). If implemented the increased
throughput would in time assist in achieving the objective of improved gross profit margins
of between 39% and 41% and net profit margin of 15%. This proposed upgrade is supported
by the new FeNi toll smelting contract.
The final phase 4 of the renewable program will extend the production output of the Smelter
operation to an estimated 13,800 tons of metal per annum. This production increase and
infrastructure renewal ensures that the Smelter operation is able to achieve sustained positive
earnings with the support of the new toll smelting contracts. The capital expenditure budgeted for
the conclusion of Phase 4 is ZAR 6.7million (£0.41 million) and is expected to be completed within 10
weeks of commencement of the upgrade.
JSR is in the process of procuring the funding of this final phase through project funding which will
be secured off the projected earnings of the Smelter operations. At the conclusion of phase 4 the
Smelter operation will have established itself as a premier smelter of waste material to produce
ferrometals based on its patented ConRoast and reductive smelter technologies.
Revenues and gross profit
Below is a table of unaudited external combined revenues for the Smelter operations, cost of sales
and gross margins achieved for Q3 2013 compared to Q3 2012.
2012 2012 2013 2013 %
change
ZAR
ZAR GBP* ZAR GBP*
Q3 Q3 Q3 Q3
Total revenue 11 702 750 896 431 16 727 333 1 080 586 42.94%
Total cost of sales 7 931 383 607 544 9 599 305 620 115 21.03%
Gross Profit 3 771 367 288 887 7 128 028 460 471 89.00%
Gross Profit % 32.23% 42.61% 32.21%
* Average conversion rate is used for the relevant quarter
Disposal of non-platinum assets
The Jubilee Board has concluded that, with the increased production from further toll smelting
contracts secured and the resultant improved earnings achieved by the Smelter operation, the
Company can no longer prolong the sale of the non-platinum assets and have elected instead to
execute phase 4 of the renewable program of the Smelters. The implementation of phase 4 will be
accelerated as it offers the final step to achieving sustained positive earnings from the Smelter
operations.
Update on the proposed acquisition of PLA
As previously reported, the Company has entered into an implementation deed and supporting
transactional documents ("Transaction Agreements") with PLA in relation to the acquisition of the
entire issued capital of PLA by Jubilee ("Proposed Transaction"), collectively referred to as the
Enlarged Group.
While the Jubilee Board acknowledges and strongly believes that the combination of the assets to
form the Enlarged Group offers value to Jubilee shareholders, the increased debt owed by PLA to its
senior creditor against a lower than expected platinum metal price requires the Jubilee Board to
review the financial structure of the transaction in accordance with the mandate given to the Jubilee
Board by its shareholders. Jubilee continues to engage with the parties to find a suitable structure to
the benefit of the Jubilee shareholders.
With regard to the processing of Dilokong Chrome Mine tailings (“Tailings”), the Company has
requested from PLA, its definitive schedule for recommissioning of PhokaThaba’s Smokey Hills mine
concentrator (“Concentrator”). The processing of Tailings at the Concentrator has the potential not
only to enhance Jubilee’s short term earnings but also supports potential interim earnings for PLA
which makes enhances the overall Proposed Transaction.
Mining and Exploration
Tjate concluded a sale of rights agreement, pursuant to a ZAR75 million (£4.5 million at
current exchange rate) cash offer from Rustenburg Platinum Mines Limited a wholly owned
subsidiary of Anglo American Platinum Limited (“the Buyer”) for its non-core Quartzhill farm
portion of the Tjate Platinum project.
The sale is now subject to the approval of the Department of Mineral Resources (“DMR”) for
the rights of Quartzhill to be transferred to the Buyer. Tjate has engaged with the Director
of Legal Services at the DMR’s office for assistance with the processing of the transfer of the
rights to the Buyer. Tjate and the Buyer are working jointly to expedite the sale. The
Quartzhill farm is considered non-core and has no impact on the Tjate mining plan.
Shareholders should note that the financial information contained in this announcement has not
been reviewed or audited by the Company’s auditors. and has been compiled in compliance with
JSE Rules and Listings Requirements.
Contacts
Jubilee Platinum plc
Colin Bird
Tel +44 (0) 20 7584 2155
Leon Coetzer
Tel +27 (0)11 465 1913
Andrew Sarosi
Tel +44 (0) 1752 221937
JSE Sponsor
Sasfin Capital, a division of Sasfin Bank Limited
Sharon Owens
Tel +27 (0) 11 809 7500
NOMAD
finnCap Ltd
Matthew Robinson/Ben Thompson – corporate finance
Joanna Weaving – corporate broking
Tel +44 (0) 20 7220 0500
Bishopsgate Communications Ltd
Nick Rome/Anna Michniewicz
Tel +44 (0) 20 7562 3350
5 December 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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